In National Car Parks v HMRC [2019] EWCA Civ 854 (20 May 2019), the Court of Appeal found that overpayments made for car park tickets were subject to VAT.
National Car Parks Limited (‘NCP’) operates ‘pay and display’ car parks in which ticket machines take cash. A board (or boards) will specify the amounts that must be paid to park for different lengths of time. Someone wishing to leave a car for a particular period has to insert coins to the value of at least the figure given for that period in order to obtain a ticket which must be placed in the vehicle’s windscreen. Once the requisite coins have been accepted by the machine, the customer will be able to obtain the ticket by pressing a button. Each machine indicates that no change is given and that ‘overpayments’ are accepted. The issue was whether this overpayment was subject to VAT.
The UT, upholding the FTT’s decision, had found that the taxable amount was the full price actually paid, including the overpayment. NCP contended that the ‘direct link’ requirement had a quantitative aspect, as well as a causal one. A payment by a customer to a supplier could only represent ‘consideration’ to the extent that there was a direct link to the supply. The overpayment was voluntary, so the contractual price did not include the overpayment.
Taking the example of a customer inserting coins to the value of £1.50 where the tariff was only £1.40, the Court of Appeal found that the tariff board, and the statement that ‘overpayments’ were accepted and no change given, indicated that NCP was willing to grant an hour’s parking in exchange for coins worth at least £1.40. In the hypothetical example, the precise figure was settled when the customer inserted a pound coin and 50p piece into the machine and then elected to press the green button rather than cancelling the transaction. The contract was brought into being when the green button was pressed and its price was £1.50.
Why it matters: The court’s decision was unanimous. Although its applications may be limited given the development of contactless payments, it may have implications to other situations where, for whatever reason, the customer accepts to pay more than the required price for a supply. It remains to be seen whether NCP will seek leave to appeal to the Supreme Court after three adverse judicial decisions.
In National Car Parks v HMRC [2019] EWCA Civ 854 (20 May 2019), the Court of Appeal found that overpayments made for car park tickets were subject to VAT.
National Car Parks Limited (‘NCP’) operates ‘pay and display’ car parks in which ticket machines take cash. A board (or boards) will specify the amounts that must be paid to park for different lengths of time. Someone wishing to leave a car for a particular period has to insert coins to the value of at least the figure given for that period in order to obtain a ticket which must be placed in the vehicle’s windscreen. Once the requisite coins have been accepted by the machine, the customer will be able to obtain the ticket by pressing a button. Each machine indicates that no change is given and that ‘overpayments’ are accepted. The issue was whether this overpayment was subject to VAT.
The UT, upholding the FTT’s decision, had found that the taxable amount was the full price actually paid, including the overpayment. NCP contended that the ‘direct link’ requirement had a quantitative aspect, as well as a causal one. A payment by a customer to a supplier could only represent ‘consideration’ to the extent that there was a direct link to the supply. The overpayment was voluntary, so the contractual price did not include the overpayment.
Taking the example of a customer inserting coins to the value of £1.50 where the tariff was only £1.40, the Court of Appeal found that the tariff board, and the statement that ‘overpayments’ were accepted and no change given, indicated that NCP was willing to grant an hour’s parking in exchange for coins worth at least £1.40. In the hypothetical example, the precise figure was settled when the customer inserted a pound coin and 50p piece into the machine and then elected to press the green button rather than cancelling the transaction. The contract was brought into being when the green button was pressed and its price was £1.50.
Why it matters: The court’s decision was unanimous. Although its applications may be limited given the development of contactless payments, it may have implications to other situations where, for whatever reason, the customer accepts to pay more than the required price for a supply. It remains to be seen whether NCP will seek leave to appeal to the Supreme Court after three adverse judicial decisions.
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